Believe it or not, traditional in-house software development teams are becoming outdated.
Today, many companies choose to outsource their software development. They want to save money, access top skills, and speed up product launches.
This shift is changing industries and how they innovate.
Let’s explore the key statistics and trends of software development outsourcing in 2024.
Top Software Development Outsourcing Statistics (Editor’s Picks)
We’ve handpicked 33+ of the latest software development outsourcing statistics, facts, and trends. Here are 6 that we believe will blow you away.
| 1 | The IT outsourcing market is currently valued at $617.69 billion |
| 2 | 84.7% of software development projects are for enterprise applications |
| 3 | There are currently 28.7 million software developers worldwide |
| 4 | 72% of the financial services sector outsources app development |
| 5 | 64% of IT leaders globally outsource their software development |
| 6 | Outsourcing IT can save you up to $6,474/month (85% savings) |
Software Development Outsourcing Statistics
The financial services sector has the highest outsourcing rate for app development at 72% (Radixweb)
The likelihood of outsourcing app development varies significantly across industries. Retail and wholesale businesses follow at 60%, while the healthcare industry has a lower rate at 31%.
Here is a table showing the percentage of organizations in different sectors that outsource app development:
| Sector | Outsourcing Frequency (%) |
| Financial Services | 72% |
| Retail/Wholesale Distribution | 60% |
| Manufacturing | 59% |
| Professional/Technical Services | 56% |
| Government/Nonprofit | 47% |
| Healthcare | 31% |
60% of organizations turn to outsourcing for app development (back4app)
This trend is driven by the specialized knowledge and high salaries commanded by app developers.
90% of companies view cloud computing as crucial to their outsourcing strategies (Springer)
The adoption of cloud technology has surged since COVID-19, with many businesses recognizing its importance. However, concerns about data security and other risks remain significant barriers to fully embracing cloud computing.
Women constitute about 16% of the global IT workforce (Wise)
This percentage matches the number of women who earn degrees in software engineering, also at 16%, according to data from Wise.
There are currently around 28.7 million software developers worldwide (Statista)
This is mainly due to the increasing global demand for software development services. But much of this growth is expected to occur in China, where the growth rate is between six percent to eight percent.
21% of companies using outsourcing partners report communication issues as their biggest challenge (Upcity)
These problems often occur when the vendor does not speak the company’s operating language, as found in a survey by UpCity.
64% of IT leaders globally outsource their software development (Statista)
This indicates that software development is the most common IT function that businesses prefer to outsource.
A 60% increase in revenue is seen by companies that effectively implement Agile (Harvard Business Review)
According to the Harvard Business Review, only 18% of companies have successfully mastered Agile, highlighting the difficulties in its implementation.
84.7% of software development projects are for enterprise applications (Radixweb)
This is the largest category, with business automation making up 53.6% of projects and eCommerce 38.5%.
IT Outsourcing Statistics
Information technology is the most outsourced industry (Radixweb)
About 37% of IT operations are handled by external services, with companies spending an average of 13.6% of their IT budgets on outsourcing, highlighting its importance for improving operations and cutting costs.
20% of US companies outsource all their IT support to other countries (Go Remotely)
Also, 15% send out all their app development and maintenance, and 10% do the same for their data management. It looks like this trend will continue, with about 9% to 11% of companies planning to outsource more IT work abroad.
Ukraine is a major center for IT outsourcing in Central and Eastern Europe (N-iX)
The country has seen its IT workforce grow to 200,000 professionals and hosts over 1,600 IT outsourcing companies, a number that has doubled over the past five years.
76% of companies outsource IT functions, compared to 52% that outsource business operations (Finmasters)
This data highlights a significant preference for outsourcing technically complex IT tasks over general business activities.
Outsourcing IT can save you up to $6,474/month (85% savings)
| Country | Average Salary/month |
| United States | $7,431 |
| China | $2,499 |
| Poland | $2,285 |
| Ukraine | $1,450 |
| Mexico | $1,378 |
| Malaysia | $852 |
| Vietnam | $589 |
| Argentina | $528 |
| Philippines | $395 |
| Brazil | $388 |
| India | $324 |
9 out of 10 Fortune 500 companies use Managed Service Providers under multi-year contracts (Kearney)
These contracts are focused on providing IT support and managing daily IT requirements, key to streamlined business processes.
IT services make up 75% of global outsourcing contracts (ISG)
This sector reached $30.4 billion, a 13% increase from the previous year, marking its best year ever. Meanwhile, business services outsourcing fell by 14%, generating $10.3 billion.
Software Development Statistics by Region
Software development in Asia is projected to grow annually by 9.16% over the next five years (Statista)
This growth highlights Asia’s role as a major hub for software development outsourcing, featuring numerous centers of tech activity across the continent.
The outsourcing industry in Europe is valued at $138.20 billion (Statista)
Eastern Europe contributes significantly and has become a key hub for software development. The region offers competitive rates and nearshoring options for Western European companies.
Mexico is the only North American outsourcing destination that offers a labor cost advantage to Western countries (Statista)
U.S. companies often choose Mexico for software development due to the high English fluency and cultural familiarity.
IT services revenue in Africa is expected to reach $23.7 billion this year (Statista)
This growth is supported by numerous software hubs across the continent, from Morocco in North Africa to Kenya and South Africa. The large young populations and shared time zones with Europe contribute to this market strength.
Global IT Outsourcing Market
The IT Outsourcing market is currently valued at $617.69 billion (Mordor Intelligence)
This value reflects IT’s role as a competitive advantage in many organizations. Beyond simple cost reduction, IT outsourcing now focuses on enhancing customer experience, business growth, and competitive disruption, especially with the adoption of cloud services.
The IT outsourcing market is expected to reach $806.53 billion by 2029 (Mordor Intelligence)
It is growing at a CAGR of 5.48%. This growth comes from more than just cost savings. Companies are also focusing on improving customer experience, growing their business, and staying ahead of competition.
By 2031, Asia-Pacific is projected to have the largest share of the outsourcing market (Straits Research)
The region’s advantage comes from affordable costs and a skilled workforce. As of 2023, India is the leading contributor. The availability of highly skilled, cost-effective IT professionals in India, China, and the Philippines makes APAC a preferred choice for outsourcing tasks such as software development and IT support.
About 54% of financial services companies in the US have fully deployed their workloads in the cloud (Mordor Intelligence)
This shift to cloud computing in the BFSI sector opens up new market opportunities, as highlighted by a recent Google Cloud survey.
Globally, the software industry leads in IT spending at 18% of company revenues (Mordor Intelligence)
This investment supports ongoing innovation and technological advances, crucial for meeting the rising needs for cloud solutions and cybersecurity.
IT Outsourcing Trends
Outsourcing software development can cut the time-to-market for new products by 25% (Mckinsey)
This was highlighted in a McKinsey report on a global hotel chain that managed to speed up its software releases by outsourcing, demonstrating the efficiency benefits of such practices.
81% of executives view cybersecurity as their top technological challenge (Deloitte)
With cybersecurity being a critical concern, 3 out of 4 executives collaborate with external partners to enhance their security measures.
The IT sector is predicted to account for 14% of the world’s carbon footprint by 2040 (Netcorp)
This significant environmental impact makes the adoption of green software crucial. Sustainability is key not only for the planet but also for brands to build trust with environmentally conscious customers.
52% of companies use outsourcing for AI and Machine Learning consulting (Deloitte)
A recent study shows that this approach helps them fill the expertise gap in these rapidly evolving tech fields.
34% of companies are collaborating with external partners to support their Robotics Process Automation (RPA) efforts (Deloitte)
This partnership trend is expected to increase as RPA becomes more integral to business operations, according to Deloitte.
Over 75% of executives plan to outsource IT services (Radixweb)
The most common areas for outsourcing include IT infrastructure services, app and software development, and cybersecurity.
The demand for software developers, testers, and QA experts is expected to grow by 22% in 2030 (US Bureau of Labor)
This makes them the fastest-growing occupations in the country, according to projections by the US Bureau of Labor.
The custom software development market is projected to reach $126 billion by 2026 (Global Market Insights)
This growth, as reported by Global Market Insights, is driven by the increasing demand for customized solutions that meet specific business needs and integrate well with existing systems.
Conclusion
Software development outsourcing is changing how businesses work.
With a huge $617.69 billion IT outsourcing market and 64% of IT leaders globally choosing to outsource, it’s clear this trend is strong. Outsourcing saves companies up to $77,688 per year, showing its cost benefits.
As technology advances, more businesses will likely outsource for affordable, high-quality software solutions.
In the future, the need for specialized skills and quicker product launches will make outsourcing even more essential in the tech world.
FAQ
How much software development is outsourced?
Around 64% of IT leaders globally outsource their software development. This reflects the widespread adoption of outsourcing to leverage specialized skills and reduce costs.
What percentage of IT is outsourced?
Approximately 37% of IT operations are managed by external services. This highlights the significant reliance on outsourcing to enhance efficiency and manage complex IT tasks.
How big is the IT outsourcing market?
The IT outsourcing market is currently valued at $617.69 billion. This substantial market size underscores its critical role in providing competitive advantages and operational efficiencies for businesses worldwide.
What cost savings can be expected from IT outsourcing?
IT outsourcing can lead to substantial cost savings, with companies reporting an average annual saving of $77,688, highlighting its financial advantage over maintaining in-house services.
